Memorandum submitted by Mr Nicholas Mostyn
QC on behalf of the Family Law Bar Association (CS 20)
SUMMARY
The proposed simplification of the formula will
not be acceptable to the separated/divorced public unless it is
accompanied by a significantly more liberal departures regime
than that proposed. Adjudication under the new departures scheme
should be done by independent judicial tribunals rather than by
officials if the Human Rights Act is not to be breached.
To permit parents in a non-benefit case to overthrow
a private agreement relating to child support on giving 14 months
notice will lead to less ancillary relief cases settling and more
litigation funded by the tax payer. It also defies the merit of
encouraging parties to resolve differences between themselves.
The proposed significant reductions in the current
levels of child support in all cases save those involving the
rich is insupportable. The new rates do not appear to be the result
of any considered research or empirical analysis. They will lead
to children being under-maintained in the majority of cases.
The proposal to leave out of account the income
of the parent with care is demonstrably unfair and will lead to
considerable discontent. As the Australian experience shows, it
can be incorporated into a new simple formula without difficulty
or by creating any degree of complexity.
The failure to impose a maximum ceiling on the
payer's liability is bizarre and amounts to crude social engineering.
Children do not have a right to share in their parent's income.
The proposals for reform fail to explain how
either shared care or serial non-residential parents will be treated.
The proposal to leave out of account unearned
income in the assessment of income is unsupportable.
1. The Family Law Bar Association is the
professional body of Barristers who practise in Family Law. It
has about 2,000 members. I have been given responsibility for
formulating the stance of the FLBA in relation to the proposed
reforms of the CSA.
2. I was called to the Bar in 1980; I was
appointed QC in 1997, and was made an Assistant Recorder in the
same year. I am a member of the Lord Chancellor's Advisory Group
on Ancillary Relief and of various other working parties. I am
an editor of At A Glance and of International Family Law.
3. In tune with current demands of transparency
and openness I would wish to state that in addition to my role
within the FLBA as person in charge of Child Support matters,
I have at all times since the inception of the existing CSA scheme
been deeply involved in it. I have written one of the principal
text books on the topic (Child's Pay2nd edition 1997),
I produce eponymous software for undertaking the calculations,
and during the last Conservative administration I acted as an
adviser to Mr Andrew Mitchell in his capacity as CSA minister,
and as such assisted in the drafting of the 1995 Act and of the
various sets of Regulations issued under the last Government.
4. I have not had any role or influence
direct or indirect in the formulation of the current proposals.
In my capacity as FLBA member in charge of CSA reforms I have
submitted a paper to the DSS on the Green Paper proposals, and
that paper formed the basis of a speech given by me to among others
Lady Hollis and her advisers at a QMC seminar held on 23 October
1998. I attach that paper hereto as Annex A.
5. In the paper I identified five areas
of grave concern in relation to the proposals for reform as set
out in the Green Paper. They were:
5.1. The proposed simplification of the formula
is inevitably going to lead to a repetition of history with incessant
demands from particular groupings of parents that their particular
circumstances have been unfairly overlooked, unless it is accompanied
by a liberal departures regime (see Paragraphs 7, 11, 12, 13,
14).
5.2 There was a failure of the Green Paper
to confirm the continuation of the existing ability of parents
in non-benefit cases to contract out of the system and to make
a private agreement between themselves which would thereafter
be variable by the Court (see Paragraph 10)
5.3 There would be significant reductions
in the current levels of child support in all cases save those
involving the rich (see Paragraphs 16-19).
5.4 The income of the parent with care is
left out of account (see Paragraphs 20-24).
5.5 There is no maximum ceiling on the payer's
liability (see Paragraphs 25-26).
6. Although I felt that each of these points
had real objective merit I was sorry (but not altogether surprised)
to read in the White Paper that almost all of them had been brushed
aside.
7. Simplification of the formula
7.1 I do not dispute that the present formulae
are too complex. As I explained in my paper it is the product
of appeasement by the previous administration to manifold groupings
of aggrieved parents. When the departures system was introduced
by the 1995 Act it should have been accompanied by a simplification
of the formula back to its original basics and a transference
of those excised elements into the departures system. The failure
to do this left the system saddled with the worst of both worlds.
7.2 I do not therefore dispute that some
simplification of the system is called for. But it seems to me
to be axiomatic that if a repetition of history is to be avoided
the simplification must not be demonstrably unfair to any particular
groupings of parents, and must be accompanied by a liberal departures
regime.
7.3 As I believe I will demonstrate below
there are at least three areas in which the proposed reforms will
be demonstrably unfair to significant groupings of parents. Moreover,
the proposed departures regime, as set out in Chapter 6 of the
White Paper, will if anything be more restrictive than the existing
regime.
7.4 The existing departures regime, operating,
I emphasise, with a much more sensitive and less crude formula
than that proposed, takes account of:
a. travel to work costs;
b. contact costs;
c. illness or disability costs;
d. pre-separation debts;
e. pre April 1993 commitments;
f. costs of supporting other children;
g. capital settlements;
h. non-income producing assets;
i. diverted income;
j. lifestyle inconsistent with income;
k. unreasonably high housing costs;
l. unreasonably high travel costs;
m. failure of a partner to contribute to housing costs;
n. unreasonably high travel costs.
7.5. By contrast the new regime will only take
account of
a. contact costs;
b. disability costs of a child in the second family;
c. pre-separation debts;
d. maintenance costs (other than fees) of the child while
at boarding school;
e. commitments in discharging the mortgage on the former matrimonial
home;
f. pre April 1993 capital settlements;
g. non-income producing assets;
h. diverted income;
i. lifestyle inconsistent with income.
7.6 I fail therefore to understand how a
cruder formula coupled with a more restrictive departures regime
will not lead to the kind of public outcry that accompanied the
introduction of the existing scheme in 1993.
7.7 A worrying aspect of the proposed departures
scheme is that Paragraph 18 of Chapter 6 proposes that where the
facts are known the discretion to vary the liability and to award
a departure will be vested in an official. It is of course the
case that under the existing regime the power to determine a departures
application may be made by the Secretary of State (ie an official)
or may be referred to a CSAT. So the criticism I am about to make
applies equally to the existing system as to the proposed system.
7.8 In October 2000 the Human Rights Act
1998 comes into force. This incorporates the European Convention
on Human Rights into domestic law. Article 6 of the Convention
provides:
ARTICLE 6
RIGHT TO A FAIR TRIAL
1. In the determination of his civil rights
and obligations or of any criminal charge against him, everyone
is entitled to a fair and public hearing within a reasonable time
by an independent and impartial tribunal established by law. Judgment
shall be pronounced publicly but the press and public may be excluded
from all or part of the trial in the interest of morals, public
order or national security in a democratic society, where the
interests of juveniles or the protection of the private life of
the parties so require, or to the extent strictly necessary in
the opinion of the court in special circumstances where publicity
would prejudice the interests of justice.
I am at a loss to understand how the judicial
power to determine the civil obligation of a parent to pay child
support under the departures scheme can be vested in an official
without offending Article 6 which prescribes a "fair and
public hearing within a reasonable time by an independent and
impartial tribunal established by law".
8. Private agreements in non-benefit cases
8.1 The present system encourages parties
to work out their own solutions and to make a private agreement.
This agreement can then be entered as a consent order, and will
from that point onwards only be variable by the court. This facility
exactly mirrors the Australian provisions which are (so far as
I am aware) universally accepted over there as being helpful and
constructive.
8.2 The encouragement of private agreements
is a cornerstone of existing divorce law (whether or not Part
II of the Family Law Act 1996 is ever implemented).
8.3 The Government has gone some way to confirming
the continuation of the existing system but there is a sting in
the tail.
8.4 Paragraphs 21 and 22 of Chapter 8 confirm
the continuation of the existing arrangements. But Paragraphs
23-25 will allow either parent, once a court consent order has
been in place for a year, and on giving two months notice, to
back out of the private agreement, and to have the child maintenance
assessed by the CSA under the new rates.
8.5 The reason given in Paragraph 25 is to
encourage parties to negotiate their agreements
"in the shadow of the CSA. All parties will
know that either parent can turn to the CSA in future, and that
it will therefore be sensible to determine child maintenance broadly
in line with CSA assessment rates".
8.6 I would suggest that there is a failure
of logic here. At present parties negotiate their agreements in
the shadow of the CSA because each knows that unless accord is
reached either may seek an assessment. For this reason each party
will have calculated the likely CSA liability before embarking
on negotiations. For the better off, reference will be made to
maximum CSA liabilities as published in Table 9 of "At A
Glance", a copy of which is attached as Annex B.
8.7 But in very many cases compromise is
reached which involves a departure from CSA liability. There are
many reasons why this may be so. For example the father may assume
the liability for the payment of school fees, or of the mortgage
on the former matrimonial home, or the mother may be given a greater
proportion of the capital than might otherwise be the case. It
is important to understand that the child maintenance element
will be but one ingredient of a number of interlocking and balanced
factors which will include the wife's own maintenance entitlement,
her capital entitlement, her pension entitlement and so forth.
When the parties settle they know that any variation of child
maintenance will only be effected by the Court, and that the Court
will look at the whole picture including the basis on which the
original compromise was reached.
8.8 This ability to reach a sensitive personal
compromise of the financial issues dividing the parties will be
severely undermined if either party is afforded the right to overthrow
the child maintenance settlement and to seek a full CSA assessment
after only 14 months. I can confidently predict that it will lead
to more cases not settling in their other aspects and the Court
being called on to decide them (in many cases at the tax payers'
expense through legal aid) when they would otherwise have settled.
Moreover, the underlying premise that parties should be dictated
to and told to settle their cases in line with CSA rates, when
they are happy to agree something else, is an unwarranted example
of statist nannying. The existing system works exceedingly well;
practitioners are fully familiar with it; and the Government has
offered no explanation whatever as to why it should be changed.
9. Reductions
9.1 The Government has never explained from
where its new rates of 15 per cent and 20 per cent have derived.
I suspect that they have been plucked out of the air. Certainly
their effect is to reduce significantly the levels of child support
that will be paid to mothers or the tax payer in average cases.
I have set out the figures in my paper (see Paragraphs 16-19 and
Appendix 1). The Government's own figures (Chapter 2 Paragraph
23) admits that there will be significant reductions in the average
assessment from £38 to £30.50.
9.2 It is said in Chapter 2 Paragraph 5 that
the 15 per cent rate is roughly half what an intact family will
spend on a single child. If the paradigm-model of the intact family
is of one wage-earner and one home-carer then it follows that
the effect of the reforms is to cut in half the standard of living
of the child following separation and to award the parent leaving
the home with a significant windfall.
9.3 In Paragraph 19 it is said that the existing
rates of liability are high compared to other European jurisdictions.
I do not have access to the work quoted and so I cannot comment
on it. I am able to state however that the rates proposed are
in their effect significantly lower than Australia (where there
are two or more children involved) or in a number of states in
the USA where a percentage impost is utilised.
9.4 The main reason offered for a reduction
of the liability is (Paragraph 20) to seek to encourage a higher
rate of compliance. I have sought to argue in my paper that this
is cynical and unprincipled. In any event I am not at all convinced
that there is necessarily a causal connection between the rate
of liability and the rate of compliance. Research in the USA has
shown that the rate of compliance is much more reactive to the
robustness of the enforcement procedures, and that where imprisonment,
removal of driving licences and publicity in the local media are
deployed against defaulters the rate of delinquency falls dramatically.
9.5 At all events, after having done this
work for some 20 years I am convinced that by English lights the
present rates of liability as illustrated in Annex A.1 and A.3
of my paper are about right, and that the proposed future rates
are too low, and will lead to children being significantly under-maintained.
10. Carer's income left out of account
10.1 In my paper (Paragraphs 20-24) I sought
to explain the utter and self-evident injustice of what was being
proposed, namely that a father (say) would pay the same whether
his former partner was on benefit or was earning a massive City
salary. I was therefore very disappointed to read the peremptory
dismissal of these concerns in Paragraphs 32-34 of Chapter 2.
10.2 The arguments of the Government can
be summarised as follows:
2.1 The parent with care already contributes
to the cost of care of the children by bringing them up in her
own home.
2.2 To bring into account the carer's income
would make the new scheme much more complicated.
.2.3 It would bring about calls to take into
account the income of a new partner.
2.4 The practical effect would be minimal as
only 6,000 parents with care who currently have a child support
assessment have an income in excess of £200 per week. "To
create complex rules for such a small group is undesirable and
unnecessary".
10.3 The first argument was articulated in
the Green Paper. It is devoid of logic. I sought to expose this,
I believe effectively, in my original paper. The Government has
not sought to meet these arguments for the simple reason that
they cannot be met.
10.4 The second argument is equally hopeless.
The Australians have devised a very simple scheme for dealing
with the problem. What they do is to establish a level of income
on the part of the carer below which it would have no impact.
Above the level the non-resident parent's income is reduced $
for $, subject to him paying a prescribed minimum. In my Appendix
3 I suggested a similar solution. For one child I suggested a
rate of 25 per cent instead of 15 per cent, but where the mother's
income exceeded £150 per week net, 25p of every £1 excess
would be subtracted from the father's net income (subject to a
minimum of 25 per cent of the calculation if mother had no income).
For 2 children I suggested that the rate should be set at 27 per
cent and for 3 or more children at 30 per cent, subject to the
same rules about reductions. One can of course argue about the
percentages, but the concept of reduction of the father's income
is extremely simple.
10.5 The third argument can be quickly dispatched.
If the statute says that it is to be left out of account, then
it will be. It is left out of account in Australia and no-one
seems to complain about it.
10.6 The fourth argument is sinister and
worrying. It implicitly asserts that it is acceptable to sacrifice
the right to fairness of as many as 6,000 non-resident parents
in order to achieve the expediency of total simplicity. In any
event far far more parents than 6,000 will be affected, by virtue
of the abolition of the unassailable private agreement as referred
to above.
10.7 I would urge the committee as strongly
as I can to invite and advise the Government to abandon its opposition
to the bringing into account of the income of both parents when
calculating liability for child support.
11. No maximum
11.1 The Green Paper was not explicit that
there would be no maximum. Lady Hollis told me at the QMC seminar
in October 1998 that the Government had not made up its mind on
the subject.
11.2 I had hoped that the utter folly and
injustice of there being no maximum was comprehensively exposed
by my paper (see Paragraphs 25-26). I was therefore shocked to
read Paragraphs 35-36 of Chapter 2.
11.3 The Government's justifcation for having
no maximum can it seems be summarised in the single sentence:
Children have a right to share in the income of their parents.
11.4 Children have no such right. They may
have an expectation, and the empirical reality is that in most
cases they do, but they have no such right. Their only right is
to be maintained. To introduce such a right of sharing into English
law is of enormous social consequence. So far as I am aware no
other legal system has ever admitted it. It is true that certain
continental systems adopt the Roman law concept of legitim,
(eg in Germany the Pflichteilricht) whereby a child is
guaranteed a certain proportion of his parent's estate on death
whatever the content of the will. But that is a far cry to giving
a child a right during his parent's lifetime to a certain proportion
of his parent's income. Will this right entitle a child who has
lived his childhood in an intact family to seek, on attainment
of majority, of an account of the sums expended of his benefit,
and payment to him of any surplus? Will he be able to sue for
his full 15 per cent?
11.5 The Committee should not underestimate
the profundity of what is being proposed. It is the crudest form
of social engineering; of inter vivos wealth distribution.
It may only affect the very well off, but the rate of relationship
failure is as high at that end of the social spectrum as it is
at any other. I see about 200 clients a year, the majority of
whom are well off. In a number of cases the result will be child
support of hundreds of thousands of pounds a year. This cannot
be justified; it will bring the system into disrepute; and it
dishonours its proposers.
12. Other points
12.1 It is not clear to me how the system
of shared care will work (Chapter 7 Paragraph 13) when there is
more than one child and the children spend different periods with
the non-residential parent. Consider, for example, that a father's
oldest child stays with him for one night per week, the other
two children from two nights per week. Do you reduce his maintenance
by the longest period of 2/7ths? Do you take an average of 5/21
or do you stick with the majority: two children and thus 2/7ths?
12.2 How will the system work for the serial
non-residential parent? A man might father a child with M1, and
then with M2, and then with M3. He might now be living with M4
by whom he has a further child. The White Paper simply does not
admit that this is possible. The only scenario that it accepts
is where F has left M1 and is now living with children with M2.
For all its other faults the existing multiple Assessment procedures
under the present system addresses multiple units logically and
fairly.
12.3 I attach as Annex C calculations that
show that there are three different ways in which the Government's
proposals can be interpreted in the case of a serial non-residential
parent, each of which has serious conceptual problems.
12.4 It is extraordinary that child support
maintenance liability will ignore unearned income (Annex 2 Paragraphs
8 and 9). The arguments that only a few parents have such income,
and that it is too complicated to assess are absurd. These considerations
do prevent the Inland Revenue from assessing liability to income
tax. The White Paper has proposed that unearned income can feature
only as an application for departure by the parent with care,
but only where the unearned income is "significant"
(Chapter 6 Paragraph 11), but fails to stipulate the boundary
between significant and insignificant investment income.
10 August 1999
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